What is Volatility in terms of trading please and other basic questions

[Gordon8]

What is Votility in terms of trading please and other basic questions

Sorry to ask such basic questions but what does Votility mean and what effect would a break out have?

Also if a company is due to report, what effect does this have on a share price - before the report?

I am currently using Omnitrader (brilliant for learning!) with a data feed from sharescope EOD. However, the share prices are different to the ones quoted by CMC. This will obviously affect stop losses, exit points etc. What is the best way around this?

It is great fun learning all about trading but boy is there alot to learn!

 

[Skimbleshanks]

Volatility is rapid up and down movement in price - some peeps call it whipsaws. In other words, the price is volatile, and is thrashing around. This often happens at tops and bottoms of trends, shaking out the few remaining bulls or bears before a trend commences.

Volatility can also appear as triangles, pennants and flags.

Momentum is rapid movement in one direction, so for a breakout to work well it needs to be accompanied by momentum.

Don't know anything about your other questions I'm afraid.

 

[Gordon8]

Skimbleshanks

Thanks so much x

I've read various complicated books, but still had no idea of what volatility and momentum (you read my mind) really was all about - and now I do thanks to your very simple explanation!!

I will remember you when I am rich!

p.s. Don't hold your breath

 

[Skimbleshanks]

Momentum is easily seen on charts - it's those l-o-n-g bars. So on breakouts you ideally need to see long bars - if you see short little ones, then the breakout may be a fake-out.

I too need simple explanations, us girlies do. :cheesy:

 

[NEILM16]

hi gordon8
What version of omnitrader do u have? 2003?It can be quite tricky to set up so if u want any advice give us a shout!Ive used it for a while.As your new to trading i think profiting from indicators supplied by nirvana maybe useful as it goes into pros and cons of which indicators work best and when to use them.It costs around £30 and comes in cdrom format.there are some really good books too depending if you are day trading or eod?
Kind regards
Neilm16

 

[Glenn]

Skim
I don't agree with some of your explanations.

"Volatility is rapid up and down movement in price"
I think it would be fairer to say that High Volatility is larger than average moves in shorter than average time periods.
You can have rapid up and down, but nonetheless small movements, which would be considered low volatility imo.

To see a pictorial view of volatility, look at a chart with Bollinger Bands on it. The wider apart the bands are, the more the price is volatile, and vice versa.

Triangles, pennants and flags are typically known as Consolidations, which appear during or at the end of a trend. These are periods of indecision, and are almost always low in volatility when compared to the preceding and following moves.

Glenn

 

[Skimbleshanks]

Gordon8 is a new gal, and therefore my description reflected her current knowledge and understanding, which is elementary. Therefore my explanation was very basic.

Triangles, flags and pennants actually depend on the time frame - a flag on a 30 minute chart will appear to be volatile on a 5 minute chart, etc, but that's splitting hairs and far too complicated for her to understand perhaps.

I'm sure that when Gordon8 is further down the road, your descriptions will help her enormously.

 

[Glenn]

With respect, what I am saying is that your explanations were incorrect.
You are describing something which has low volatility as volatile. That is the opposite of the correct explanation.

Sorry for short reply - cooking dinner for kids.

Glenn

 

[Gordon8]

Glenn and Skimbleshanks

Thanks both of you for your explanation - I am gradually getting the plot!

Skimbleshanks was correct in realising that my knowledge is at such a basic level that I don't understand alot of the information in the various books I am reading- so that a very basic answer that I could easily grasp (and build on) was what was needed.

Having understood her very simplistic explanation has helped me visualise what these terms mean. This has subsequently helped me understand your more in depth explanation and start to grasp the complicated information in the book - A Result for me!!

I don't believe that I am completely stupid (but this is debatable!) but it is quite hard to understand these completely new terms in a completely new context. The more I read and the more I ask questions the more I understand.

Thanks again both of you

Alex xx

 

[Gordon8]

NeilM16

I have Omnitrader 2003 stocks, pre-release 7 and a very kind man from Signal Traders has helped me set it up for the UK market, including a couple of nifty profiles, which apparently are suitable for trading on the FTSE.

I only got it last week and so I have lots to play with but I am sure that when I get to grips with it, I will have loads of questions that hopefully you will be able to answer.

In the meantime, if you would like to know the profile settings he gave me, (They certainly work well in game mode!) I would be more than happy to e-mail them to you.

Happy, wealth making trading!

 

[Skimbleshanks]

Glenn:

Then I bow down to your vastly superior knowledge and complicated phraseology, and grovel for forgiveness.

:cheesy: :cheesy: :cheesy:

 

[Gordon8]

Skimbleshanks

Please, please pretty please keep the very simple explanations coming!

I have read so many trading books that I should probably be the most informed person on this site!

However I am clearly not

I am slowly getting the basics and am avidly practicing paper trading the FTSE till I know that there is a slight possibility that I will make some money from my knowledge rather than luck. My confidence is slowly building thanks to all the help I am getting and I am starting to get a feel for the markets.

Soon I will progress onto the heady hights of 1p bets on finspreads and then the sky is the limit when I have mastered CMC' s gastly platform! - Only thing I need to do after that is to make some money!

Very simple is good for me and any simple advice for spread betting the FTSE is gratefully received - Thanks again x

 

[Newtron Bomb]

gordon8
To be fair CMC it VERY problematic at the moment and has been on the blink for the past week or so... but like most things it is easy when you know how.

oh and check your private mail

 

[dsmodi]

Gordon8

It was great reading your DIPLOMATIC post - if u need to work - go for becoming a diplomat.

 

[Grey1]

volitality occurs when you are Long 3 stocks and suddenly some idiot finds ANTRAX in white house.. Now this is volatility ...

 

[Skimbleshanks]

Ahhh ... those were the days. :cheesy:

 

[Halfbutt]

hi guys great thread, very amusing to read. sorry to jump in , but as im on this thread i thought id ask it here as it is first steps after all.

How do you get those cartoons etc under your name ?
illlet you imagine what one i will put up once i know how to
Half>>>>>>>butt

 

[Les93]

Halfbutt,
Cartoon images:

1.at the top of the page put the cursor on community and click on "My profile" in the dropdown menu

2. Click on "Edit Options"

3. Scroll to the bottom to the heading "Avatar" and click on "Change Avatar"
- select an avatar and the click on submit modifications

there is a means of supplying your own image but there is a large list of ugly ones to select from here


Cheers Les

 

[lita]

To help with your other questions. Sharescope obtains its realtime prices from the exchange, LSE or whichever. CMC is a Market maker in its own right, thus its CFD & Spread betting prices are down to whoever is trading with it at any one time.

Often the prices quoted by CMC or any other Market maker for that matter, closely align the markets, especially on the larger and more heavily traded stocks. However if a stock moves very quickly then the Market maker will often try to anticipate demand and the price moves out of sync. as it were, for a while. In that case it is better to wait for a settling of the price.

One way to overcome this is to use the services of a 'miidle man' such as GNI. It is then possible to occasionally trade within the spread. However this comes at a price. GNI is a commision based company, whereas CMC, using their Deal 4 Free vehicle, is not.

 

[Gordon8]

Lita

Thanks for that! - I am trading end of day so hopefully if I just take the CMC price and allow for that in Omnitrader - hopefully I will be OK.